Despite deal, taxes to rise for most Americans

Published 9:54 PM EST Jan 02, 2013

PORTLAND, Maine -

The tax package negotiated by President Barack Obama and Senate Republicans and passed by Congress will protect 99 percent of Americans from an income tax increase. But that doesn't mean that most of them won't see their taxes rise.

In fact, the vast majority of workers will pay higher federal taxes in 2013, largely because a temporary reduction in Social Security payroll taxes expired on New Year's Day. The tax package did nothing to prevent that from happening.

The median household income in Maine is a little more than $46,000 a year. A rise in payroll taxes means the government will now collect close to $100 more from the average Maine family's monthly income.

Some Maine residents said they worry the increase could have a greater impact on the local economy, since many will have to tighten their spending even more.

"A family making $50,000 a year doesn't have a great deal of discretionary capital to spend, so that thousand dollars may represent a third of it, a quarter of it, 20 percent of it, so it is serious," Portland resident John Everets said.

Some others said the increase is what is better for the economy.

"We have got to do everything, and everybody has got to kick in. So I am not thrilled about paying 2 percent more, but I do realize everybody has got to contribute," Portland resident Bill Spears said.

WMTW News 8 financial analyst Kristin Guibord said families should work the tax increase into the family budget.

"So we need to take a deep breath and just figure out how to make it work within our budgets and let it go as much as we can," Guibord said.

A nonpartisan Washington research group, The Tax Policy Center, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement. High-income families would get the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

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